1. 2012: Future Impact of Health Care Reform on Laboratory Business
By: Mark S. Birenbaum, Ph.D.
Administrator
National Independent Laboratory Association (NILA)
November 9, 2012
National Independent Laboratory Association, 906 Olive Street, Suite 1200, Saint Louis, Missouri Telephone: , Fax: , Web Site:

2. Healthcare Reform May Be Good If You Live To Tell About It

3. Tax Versus 1.75% Part B Cuts And Permanent Versus Temporary
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Tax
$750m =
$7.5b
1.75% Part B
Cut (Senate)
-1.75%
-3.50%
-5.25%
-7.00%
-8.75%
3% Growth
$7.85b
$8.09b
$8.33b
$8.58b
$8.84b
$9.10b
$9.38b
$9.66b
$9.95b
$10.24b
$10.55b
$8.19b
$8.28b
$8.38b
$8.48b
$8.59b
$9.11b
$7.95b
$8.04b
$8.14b
$8.24b
$8.34b
$.14b
$.29b
$.44b
$.6b
$.76b
$.79b
$.82b
$.84b
$.86b
$.89b
$530.9m
6.9% Growth
$8.97b
$9.59b
$10.25b
$10.96b
$11.71b
$12.52b
$13.37b
$14.31b
$15.3b
$8.81b
$9.26b
$9.72b
$10.21b
$10.72b
$11.46b
$12.25b
$13.1b
$14b
$8.66b
$9.09b
$9.55b
$10.03b
$.15b
$.31b
$.5b
$.7b
$.93b
$.99b
$1.06b
$1.12b
$1.21b
$1.3b
November 6, 2009

4. Clinical Laboratory Fee Schedule Cut Effective January 1, 2013

5. Increases to Part B CLFS 2011-2015
Cuts to Part B CLFS
2011
-1.75%
ACA*
2012
2013
-2.00%
(SGR “fix”)
Sequestration
Total
-9.25%
2014
2015
-12.75%
Productivity Adjustments
-5.7%
Estimated
-18.45%
MedPAC
-10%
-28.45%
Increases to Part B CLFS
CPI
2011
+1.1%
2012
+3.6%
2013
+1.7%
2014
+1.5%
Est. (CBO)
2015
+9.6%
Overall % + 9.6% = %
*ACA: Affordable Care Act

6. Impact of Cuts on Medicare Payments
Test Paid at $10 in 2010
17% Cut

8. September 15, 2011
MedPAC Public Meeting

9. Potential Medicare offset options for repealing the SGR System
TABLE
A-4
BLE

10. September 27, 2011 Meeting with MedPAC Attending:
NILA Mark Birenbaum, Ph.D.
Julie Allen
Erin Will Morton
ACLA Alan Mertz
Roche Diagnostics Kathleen Claessens
MedPAC Mark Miller, Ph.D., Executive Director
James Mathews, Ph.D., Deputy Director
Ariel Winter, MPP, Principal Policy Analyst

12. George Washington University (GWU) Survey Spring-Fall Commissioned by the National Independent Laboratory Association

13. List of Independent Community Labs for the GWU Survey
l Began with the June 14, 2012, CLIA List of Independent Laboratories in all 50 States (approximately 4,000 laboratories).
l Excluded:
 Laboratories affiliated with other practice structures (i.e., physician office laboratories or hospitals) or other laboratories that did not meet the definition of an independent laboratory.
 Publicly traded national laboratories (e.g., LabCorp, Quest).
 Hospital laboratories without a separate federal tax ID number (Medicare reimbursement for hospital laboratories is mainly derived from Medicare Part A).
 Assisted Reproductive Laboratories/In Vitro Fertilization Laboratories. (These laboratories receive little or no Medicare reimbursement).
l Subsequently generated a convenience sample of approximately laboratories.
l 77 laboratories from 22 states completed the survey.

14. Market Analysis Profit margin Impact of Medicare cuts Payer mix
Beneficiary mix
Case studies
Most pressing business concerns

15. Services by Customer Type
Practice
Hospitals
NH/SNFs
ALFs
Home
CHCs

16. Average Profit Margin
0-3%
4-6%
7-9%
10-12%
12-15%
>15%

17. Key Findings: Profit Margin
Laboratories with low profit margins were more likely to:
Serve rural communities: Nearly 40 percent of laboratories serving rural communities had low profit margins.
Provide most of their stat and same-day turnaround testing to nursing homes/SNFs: 71 percent of labs that provide the majority of their stat and same-day turnaround testing to nursing homes and SNFs had low profit margins.

18. Anticipated Business Challenges
Medicare cuts
Nat’l Insurers
HIT Regs
ACO
Medicaid cuts
Medicare changes
Other
Mergers
Contract

19. 2013 Regulatory Activity Affecting Laboratory Business
Direct access to lab test results – waiting on release of a final rule
Molecular test placement and payment – November 2012 CMS decision to place tests on Part B CLFS instead of PFS
Laboratory developed tests – regulatory authority to be FDA or CLIA?
Health reform – future of state exchanges (laboratory services a required benefit to be provided through the exchange); development of ACOs and other payment reform models

20. NILA’s 2013 Legislative and Regulatory Activity
Meet with MedPAC to Present Results of GWU Survey
Partner with Other Lab Associations Through Clinical Laboratory Coalition (CLC)
Encourage Members of Congress and Hill Staffers to Visit NILA Members’ Laboratories
Take Message to Capitol Hill During “Lame Duck” Session

21. NILA Capitol Hill Day November 14-15, 2012 Liaison Hotel l Washington, DC

22. In 2013 Watch Out For NILA ALERT!!! More Part B CLFS Cuts
Resurrection of Competitive Bidding Proposals
Resurrection of Copay/Coinsurance Proposals

23. Challenges Ahead
Migration of Independent Physician Practices to Hospitals
Restrictive Policies of National Insurance Companies
Costs and Difficulties of Adopting and Connecting to Electronic Health Information Systems
Decreases in Lab Testing Volumes Due To
Poor Economy
Changes in Ordering Patterns
Frequency Limitations